Which of the following is FALSE?
A) Capital flows today are larger mainly because economies are larger.
B) The last two decades are the first time in history that a nation has borrowed more than 10 percent of its GDP.
C) There are important qualitative differences between capital flows today and in the past.
D) Today most international financial transactions involve buying and selling assets denominated in foreign currencies.
B
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The federal government could stimulate investment spending by
A. phasing out the depreciation allowance on corporate income taxes. B. reducing subsidies to businesses. C. reinstating the windfall profits tax. D. reducing the tax rate on capital gains.
Which of the following is a shortcoming of GDP?
A. GDP measures nonmarket transactions. B. GDP includes an estimate of illegal transactions. C. GDP includes an estimate of the value of household services. D. GDP does not account for the distribution of consumption across a country's population.
The amount of inflation caused by expansionary monetary policy depends on the slope of the aggregate supply curve.
Answer the following statement true (T) or false (F)
Consider a local, privately-owned electrical cooperative named Poweshiek Power Company (PPCo). PPCo has just completed a clean-coal-burning electrical power plant in Iowa. Currently, PPCo can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of PPCo experienced incredibly high rates of return on their investment due to the profitability of the corporation.
(i) New entrants to the market know they will have a smaller market share than PPCo currently has. (ii) PPCo is a natural monopoly. (iii) PPCo would experience higher profits if it were government-run. a. (i) and (ii) only b. (ii) and (iii) only c. (i) and (iii) only d. (i), (ii), and (iii)